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Full Text of Decision

44964
SERVICE DATE – FEBRUARY 29, 2016

EB

SURFACE TRANSPORTATION BOARD

DECISION

Docket No. FD 35950

NORFOLK SOUTHERN RAILWAY CO.—PETITION FOR DECLARATORY ORDER

Digest:[1] Norfolk
Southern Railway Company requests an order declaring that claims of an adjacent
property owner seeking to recover damages against the railroad related to flooding
are preempted by federal law. The Board denies the petition for declaratory
order but provides guidance on the question of preemption.

Decided: February 24, 2016

Norfolk
Southern Railway Company (NSR) seeks an order from the Board declaring that the
state court claims filed by Dugan Professional Building and Rental, LLC,
Doctors Dugan and Dugan, LLC, and James L. Dugan II (collectively Dugan),
seeking to recover damages from and an injunction against NSR under Tennessee
common law theories of negligence, nuisance, and trespass, are preempted by
49 U.S.C. § 10501(b) of the Interstate Commerce Act, as
broadened in the ICC Termination Act of 1995 (ICCTA). For the reasons
discussed below, the Board denies NSR’s petition but provides guidance on the
question of preemption.

BACKGROUND

Dugan
filed a lawsuit July 31, 2014, in the Circuit Court in McMinn County, Tenn., in
which it claims that it experienced substantial flood damage caused by the
alleged negligence of NSR when it discarded and failed to remove clear cut
vegetation debris from its drainage ditch and culvert, causing the debris to
accumulate in its drainage infrastructure. Dugan is seeking monetary damages
and an injunction requiring NSR to repair, reconstruct, and redirect its drainage
culvert and drainage infrastructure.

On August 3, 2015, NSR filed a petition for declaratory order
asking the Board to find that the state court claims filed by Dugan to recover
damages from NSR under Tennessee common law theories of negligence, nuisance,
and trespass are preempted by 49 U.S.C. § 10501(b). Dugan
replied on August 18, 2015, arguing that its state claims are not federally
preempted.

The Dugan property (the Property) is adjacent to, and
downhill from, a railroad mainline owned and operated by NSR. The Property has
had a dental practice office located on it since 1978. (Dugan Reply 3.) Dugan
alleges that in 2012, NSR clear cut vegetation located above and on the
opposite side of the rail line from the Property and negligently discarded the
debris, allowing logs, tree limbs, and other materials to clog the drainage
infrastructure that extends to and under the Property. (Id.) Dugan
asserts that in 2013, the dental office building on the Property experienced
substantial flooding and that Dugan made repeated requests to NSR to alleviate
the problem, but that NSR refused to take any action. (Id. at 4.)
According to Dugan, the Property incurred substantial damages, including damage
to the building’s foundation, ductwork, and heating and air conditioning. (Id.
at 5.)

Dugan
argues that the state court action in this case involves issues of disputed
fact, and the Board should decline to issue a declaratory order and allow the
preemption determination to be made by the Circuit Court for McMinn County,
Tennessee. (Id. at 7.) Alternatively, Dugan argues that, if the Board
decides to issue a declaratory order, it should find the claims are not
preempted by 49 U.S.C. § 10501(b) because the claims do not
unreasonably burden interstate commerce or interfere with rail transportation. (Id.)
Rather, Dugan states that its claims seek redress for tortious acts by a
landowner who happens to be a railroad company. (Id. at 9.) Dugan asserts
that Emerson v. Kansas City Southern Railway, 503 F.3d 1126, 1133 (10th
Cir. 2007) controls the analysis here. (Dugan Reply 11.) In Emerson, the
plaintiff landowners sued a railroad alleging trespass, nuisance, negligence,
and other state law claims after the railroad allegedly discarded railroad ties
and vegetation debris in a drainage ditch, which resulted in flooding on the
landowner’s adjacent property. Emerson, 503 F.3d at 1133. The court
held that § 10501(b) did not preempt the landowners’ claims involving the
disposal of railroad ties and debris into the drainage ditch. Id. at
1131.

NSR acknowledges that in May 2012 and July 2012, it clear cut
vegetation and conducted related clearance of vegetation debris in order to
remove vegetation that could impair track safety, track visibility, and overall
rail operations. (NSR Pet. for Declaratory Order 2-3.) In its petition for
declaratory order, NSR explains that vegetation control is required by
Tennessee state laws and Federal Railroad Administration safety regulations. (Id.
at 3.) NSR argues that Dugan’s alleged damages stem from NSR’s vegetation
control and NSR’s design and maintenance of its drainage culvert, which are
necessary and integral aspects of NSR’s rail operations. (Id. at 5.)
NSR states that the Board has exclusive jurisdiction over the operation of rail
lines and as a result, § 10501(b) preempts Dugan’s claims against NSR. (Id.)

NSR attempts to distinguish Dugan’s claims from those in Emerson
on grounds that the carrier in that case did not establish that proper disposal
of railroad ties was a necessary part of its rail operations. (NSR Pet. for
Declaratory Order 10.) In contrast, NSR states, it has a transportation-related
interest as a rail carrier in vegetation control, especially with respect to
the heavy vegetation that surrounds this portion of its track, as too much
vegetation can have a direct effect on safety and operations. (Id. at
11.) Because there is abundant case law addressing preemption of state and
local claims involving railroad design, construction, and maintenance, we will
deny NSR’s petition for a declaratory order, but will provide general guidance
on the issue of preemption.[2]

DISCUSSION AND CONCLUSIONS

Section
10501(b) categorically preempts states or localities from intruding into
matters that are directly regulated by the Board (e.g., railroad rates,
services, construction, or abandonment). It also prevents states or localities
from imposing requirements that, by their nature, could be used to deny a
railroad’s right to conduct rail operations or proceed with activities the
Board has authorized, such as a construction or abandonment. Thus, state and
local permitting or preclearance requirements, including building permits and
zoning ordinances, are categorically, or per se, preempted. City of
Auburn v. STB, 154 F.3d 1025, 1029-31 (9th Cir. 1998). Otherwise,
state and local authorities could deny a railroad the right to construct or
maintain its facilities or to conduct its operations, which would
irreconcilably conflict with the Board’s authorization of those facilities and
operations. Id. at 1031; CSX Transp.—Pet. for Declaratory Order,
FD 34662, slip op. at 8-10 (STB served Mar. 14, 2005). State and local actions
also may be preempted “as applied”—that is, if they would have the effect of
unreasonably burdening or interfering with rail transportation. SeeFranks
Inv. Co. v. Union Pac. R.R. (Franks), 593 F.3d 404, 414 (5th Cir.
2010) (en banc).

The Board and the courts have found that state law claims
pertaining to the design, construction, and maintenance of an active rail line
(including the embankment and associated drainage structures that support the
rail line) are preempted. SeeThomas Tubbs—Pet. for Declaratory
Order (Tubbs), FD 35792 (STB served Oct. 31, 2014), aff’d—F.3d—,
2015 WL 9465907 (8th Cir., Dec. 28, 2015), and cases cited therein. In Tubbs,
after a full factual record had been developed in the state court, the Board
found that the actions of a rail carrier in designing, constructing, and
maintaining an active rail line are clearly part of “transportation by rail
carriers” and therefore subject to the Board’s exclusive jurisdiction and entitled
to federal preemption under § 10501(b). Tubbs, slip op. at 4. But if the
Tubbses’ claims instead involved the discarding of railroad ties and vegetation
debris into a drainage ditch they would not necessarily have been preempted. SeeTubbs, 2015 WL 9465907 at *4 (agreeing with the way the Board had
distinguished Emerson).

Therefore, if Dugan’s state law claims are based on harms
stemming directly from the actions of NS in designing, constructing, and
maintaining an active rail line (including the associated drainage structure),
they would be preempted, as those subject areas are within the Board’s
jurisdiction over rail transportation. Indeed, to the extent Dugan’s claims involve
the cutting and clearing of vegetation, which would be rail line maintenance facilitating
the safe operation of trains, they would likely be preempted. However, if
Dugan’s claims against NSR involve actions that would generally not be
considered part of rail line maintenance (e.g., the discarding of vegetation
debris, see Emerson), they would not likely be considered part of rail
transportation, and thus would not likely be preempted.

Questions of federal preemption under 49 U.S.C.
§ 10501(b) can be decided by the Board or the courts. See, e.g., 14500
Ltd.—Pet. for Declaratory Order, FD 35788, slip op. at 2 (STB served June
5, 2014); CSX Transp., Inc.—Pet. for Declaratory Order, FD 34662, slip
op. at 8 (STB served May 3, 2005). In this case, because the matter is already
pending in state court and there is abundant case law addressing preemption of
state and local claims involving railroad design, construction, and
maintenance, we believe the state court is the appropriate place to determine
the full nature and extent of Dugan’s claims, and to apply the relevant Board
and court precedent discussed above.

Although we are leaving the fact-finding to the court in this
instance, the record raises the concern that NSR improperly disposed of the
debris in the drainage ditch. If so, it would be another instance in, what to
me, is the frustrating trend of railroads showing a disregard for how their
actions affect those that live adjacent to their lines and in the communities
that they serve. Even in instances where a railroad’s actions are indisputably
protected by Federal preemption, in my mind that does not excuse the carriers
from exercising a higher degree of care where it is reasonable. It also
troubles me when railroads are quick to use preemption as an excuse not to even
listen to communities that have concerns about rail activities. I find it
particularly frustrating when disputes result in litigation that might have
been avoided had the carrier taken steps to minimize damage or engage the
community, even if not legally bound to do so.

While railroads need and merit the protection that ICCTA preemption
affords, in my view they also need to consider how their actions may impact
neighbors when carrying out maintenance procedures and implementing design
standards. Just because railroads are not required to do something because of
preemption, it doesn’t mean that they shouldn’t do so.

[1]
The digest constitutes no part of the decision of the Board but has been
prepared for the convenience of the reader. It may not be cited to or relied
upon as precedent. Policy Statement on Plain Language Digests in Decisions,
EP 696 (STB served Sept. 2, 2010).

[2]
On October 6, 2015, NSR filed a supplement notifying the Board that on
October 2, 2015, it filed a motion to stay the proceeding in state court
pending a decision from the Board on the preemption issue. NSR filed a second
supplement on November 23, 2015, to notify the Board that the court held a
hearing on the motion on October 29, 2015, and that the court decided not to
hold any further hearing or trial on Dugan’s claims until the court receives
the Board’s “direction and directive.” (NSR Suppl. 2, Nov. 23, 2015.) NSR
explains that although the court “technically denied” NSR’s motion to stay, it
granted a de facto stay for the purposes of this Board proceeding by asking the
Board to determine whether Dugan’s claims against NSR are preempted. (Id.
at 1-2.) On December 7, 2015, Dugan also filed a supplement to notify the
Board that the state court denied NSR’s motion to stay. (Dugan Suppl. 1, Dec.
7, 2015.)